Is the ECB's New Plan Too Late to Save Greece?

European markets may have breathed a sigh of relief on Thursday after the European Central Bank announced its new unlimited bond-buying program, but some economists have said that it won’t help Greece get out of its “debt trap.” Indeed, one economist told CNBC that Greeks fear that in the process of “saving” the euro zone Greece itself will be sacrificed.

Sean Gallup

A one Euro coin stands on a map of Brussels.

Spain and Italian 10-year bond yields have dropped sharplyafter the ECB’s latest “Outright Monetary Transactions” policy was announced on Thursday, with investors perceiving the move as potentially insulating the countries from following Greece into a vicious cycle of recession and rising debts.

Meanwhile, Greece itself continues to struggle with unemployment and shrinking economic growthwhile scrabbling to find a further 11.5 billion euros of spending cuts and reforms to satisfy creditors and returning debt inspectors.

The ECB’s latest move is cold comfort — and potentially fatal for Greece, according Yanis Varoufakis, professor of Economics at the University of Athens.

He told CNBC Europe’s “Squawk Box” that the reaction in Athens is one of ambivalence as Greece sees a potential forcing-out of the euro zone.

“This is clearly a program aimed at saving Italy and Spain and Greeks are not sure whether to be happy or despondent,” he said. “On the one hand, it could be that this signals an attempt by the euro zone to deal systematically with a systemic crisis.”

“But it could be that the price Europe tries to exact for saving Spain is amputating Greece.”

Under the new program, the ECB has waived its seniority status over private creditors, something it did not do in the case of Greece. Varoufakis told CNBC that could prompt accusations of unfair treatment.

“We’re hearing now that Italy and Spain are going to enjoy a bonds purchasing program where the ECB is renouncing its super seniority. Why are there different measures and different criteria,” he asked.

As Greek Prime Minister Antonis Samaras meets Herman Van Rompuy, the head of the European Council on Friday, Troika officials are returning to Athens to continue their investigations into the State’s finances to see whether the country is making enough progress on its reforms.

Officials are set to report their findings in October and the next tranche of rescue funds totalling 31 biilion euros ($39 billion) relies on a positive report.

Greece’s economy continues to struggle with a deepening recession in the face of austerity measures. The economy contracted 6.2 percent in the second quarter from a year ago and grim unemployment data for June showed one in four Greeks are now unemployed.

The government is reportedly facing added pressure from international creditors behind closed doors.

According to a report in The Guardian newspaper, Greece has been told by the Troika that it should reform its labor markets by making workers in all sectors work a six-day week.

But whether the Greek government can enforce longer working hours and further austerity remains to be seen.

Four thousand members of the Greek police and fire services marched through the capital on Thursday shouting “Thieves! Thieves!” after the government planned pay cuts to an already stretched public sector.

Stuck between a rock and a hard place, however, diplomatic pressure remains on Greece to comply with its current bailout terms.

At a meeting in Berlin on Tuesday, the Greek Finance Minister Yannis Stournaras attempted to reassure his German counterpart Wolfgang Schaeuble about "Greece's progress in complying with the conditions.”

Germany seemed less than convinced however, with Schaeuble reminding Greece that action must follow words. "It is central for Greece to implement fully its commitments," he said.

The bond market continues to bet that Greece’s debt problems will get worse with yields on 10-year Greek bonds at around 21.5 percent.

Bob Parker, Senior Advisor at Credit Suisse, told CNBC that the country in a “classic debt trap” with the Greek economy contracting by around 20 percent since 2008.

“This vicious cycle of austerity that leads to a collapse of fiscal revenues and therefore there’s a lack of progress in dealing with the budget deficit,“ he said. “Something’s got to give here and at the moment, nothing is giving at all,” Parker said.

Varoufakis agreed, stating, “There is absolutely nothing Greece can do to escape this debt spiral. This debt, deflationary and lack of investment spiral,” he said. “Greece is locked into this free-fall.”